A “counter trend trade”, I prefer to call them bollinger bounce trades for clarification, I believe you’re referring to those trades anyway:
A) a short scalp taken as a bounce from an extreme price level (the bollinger edge). This is what bollinger bands are about, they are showing you that the price is likely overbought/oversold. I agree it’s dangerous to jump in during a trend, which is why we don’t usually take counter trend trades when the bollinger has a steep angle to it.
B) when the bollinger is flat: much more successful, we are still trading price extremes but the trend during that period is not as strong.
I know what you are saying, “the trend is your friend” and you are saying that if the trend on the 4hr and DAILY is down, you only trade down but that is not quite what we’re following here.
At it’s most basic, when price is at a S/R level and the MAs cross in a direction that agrees with that S/R level, it’s generally a good time to get in the trade:
A) Support line, price is on bottom bollinger, MAs cross over going upwards: BUY
B) Resistance line, price is on top bollinger, MAs cross over going downwards: SELL
C) Add to position on higher TF trends from bounces off the middle bollinger if acceptable for your risk strategy.
Generally, the 5 and 15min are for timing the entry to the position and the higher TFs are the targets. Yes, we look at the 4hr and Daily but for the day trader they are merely target points or major levels of S/R.
So, I have some resistance on the 1hr at 1.6280 and 1.6300ish.
5min bollingers are flattening possibly indicating the uptrend is slowing down for the moment.
15min: Price is on extremes of bollingers but has been in a strong uptrend since about 5GMT.
Thinking about a short but want a 15min MA crossover to confirm.
Edit: For anyone reading this post in future, let it serve as an example of what NOT to do when trading the bounces. The bollinger angle is too steep here to do that and the recent 1hr price action makes it a dangerous trade.
Ok. I am short from 1.6320.
1hr chart is at resistance.
Tweezer top on the 15min chart having wicked outside the bollingers.
MAs have crossed down on the 5min chart.
I’m going to be careful with this one as price has been bouncing off the 14LWMA in the uptrend so far so I plan to get my stop to break even pretty quickly. SL at 1.6345.
Anyone got any thoughts - would you enter this?
We are seeing trending pairs where USD is involved since a couple of hours. They have broken out of a tight channel and riding the upper BB and lower BB depending what pair you look at.
Question for you R Carter, do you have a preferred timeframe that you take the MA crosses off assuming you’re just looking to get into a trend?
Obviously, 5min is more risky as there is more noise, 15min less, 1hr less risky but the entry will be lagging by a bit.
Ironic that I had a long entered this morning, which got stopped out
Would have had a good 90 pips by now.
Reviewed your early morning chart. I will have to agree with Cas on this trade. The angle from the bottom low to the high where it went through the bols upperband was 52 degrees. This was a dangerous trade but you don’t need anybody to remind you of this now.
Posting your charts are very good learning tools for everybody so thank you. If this trade went down as you planned it would have been good for you in the short term but bad for everybody looking for direction on how to make good trades.
Did you look at the FTSE and it’s direction? Did you look at the NY Futures? Did you look at anything but the MA cross after breaking through the Bols-20?
Something has to change to reverse this sharp uptrend. The big money may make a push for a down move but it won’t last unless they want it to last. Usually its a push for the retail crowd to jump on the train heading south so they can make a bunch of pips on the down and on the way back up. With this sharp a move up a down to the channel bottom is probably not going to happen so if you jump on a NY noon reversal look to close at the midline.
Please understand I’m not asking these questions to try to put you down or embarrass you. The key to eliminating bad trades is to analyze each and every trade even the winners.
A good trade is not measured in the amount of pips that were made. A good trade is a good entry and a good exit and reading the trade correctly. You will lose enough when you do everything right so why trade when everything is not right. This type of trading without analyzing the trade afterwards just creates bad habits and these bad habits are very hard to correct.
I can’t speak for Cas but I have made this type of trade time and time again before I quit doing it. We all make bad trades and we can only hope the future has less and less of them.
Don’t worry, I don’t get embarassed by much. Besides it was only -25 pips, it’s not like it’s the end of the world.
I agree we were in an uptrend but the trend has to turn at some point. The bollinger on my chart was flat, which usually leads to a pretty good scalp plus we were at resistance at the time. I think it was the 50% fib retracement point as well.
Did I look at the FTSE of the futures…no. I know all these things are linked but I don’t believe you have to, to be able to trade a chart based on technicals alone (assuming you get the technicals correct )
Most of these edge of bollinger trades against the main trend…the target is the mid bollinger.
Could I have gotten 10pips out of that trade…yes…but it found support on the 14LWMA and continued up with the trend instead. The question I have then is…at some point…one of those trades actually becomes the new trend and a resistance point is as good as any for PA to go the other way, wouldn’t you say?
The exact question is when do we decide to hold a trade like this past the centre bollinger, ie that’s when it becomes the new downtrend in this example.
Oh…and re the posting charts, I post whatever good or bad so both examples can be seen. If someone feels it’s a bad or good trade, just say so - that’s why you’ll often see the words “any thoughts?” posted with the trade - this is a forum after all. I’m not trying to give the impression it is [B]the [/B]way to do it but I post all my charts so we can see what’s being traded, some ideas about trades, and the thought processes behind them.
[I][B]Edit[/B]: Sorry, just had a re-look at it, the bollinger was [B]not [/B]flat and to think I warned about that a few posts before :mad: However, the 5min MAs had crossed over, which is what led me into it and the tweezer top is a pretty good signal. Oh well - I can see in hindsight, which is fine as I won’t do it again.[/I]
If you trade GBPJPY you would need to keep an eye on FTSE 100 Futures. If you trade GBPUSD the preferred reference is the EURUSD because GBP [B]follows[/B] the EURO.
Often, just by looking at the EURUSD PA you can get vital clues what the GBP is likely to do.
In regards to a change of [B]established[/B] trend…?
If PA moves from one of the outer BBs to the center BB with LWMAs starting to point in that direction on 1h chart I would consider a change in [B]established[/B] trend.
But that is in case of an established trend like we are seeing today. Often there is noise and it looks like a trend is established. But in fact it is not.
My preferred chart time is 1h for the longer trade. Yesterday you will remember you were boll boncing on the 5m and I had placed a trade long at 1.6173 (post 331). My TP1 was hit at +50 pips yesterday. My TP2 was hit at +130 pips today.
[B]JohnnyBSmart[/B]
Placing the above trade illustrates my point no? Day and 4h were trending down. Using your rules I should not have placed that trade.
Last night I had a ‘ties’ worth of beer (metaphor for more than a few on another thread). When you came in and told us all we were trading wrong. It was a red rag to a bull. No offense…hope you stick around.
So, when PA is on the middle bollinger, what do you do, go with the MAs at that point? That could be just as risky as the middle bollinger is also a point where price can bounce back and continue with the established trend. Also, I would expect any trade entered at the middle bollinger to have to have a much wider stop loss than one entered on the edge of the bollinger? I do agree that that is the point where we essentially split the PA into bullish or bearish for that timeframe but it’s not an exact line is it SOmetimes, candles move 10pips past the centre band then stay there for 1 or 2 candles before bouncing back.
